I Can't Help It, I Hate the Placebo Effect

I know it is wrong, but in my heart of hearts, I detest the placebo effect. I prefer a world without this kind of statistically noisy pseudo-magic. So I take guilty pleasure in reading this article, which casts doubt on the belief, developed over the last 70 years, that the placebo effect can be an important clinical tool.

The "open placebo" stuff, especially, is hard for a devout rationalist to stomach.

The reason it is a guilty pleasure is because, also in my heart of hearts, I know that I should applaud anything that helps. If placebos and open placebos improve clinical outcomes and reduce suffering, that is a good thing.

Comments on Crypto

I'm a hardcore crypto skeptic, borderline hater. Regarding digital currencies, such as Bitcoin and Ethereum, I don't see what real problem they are solving--outside of enabling criminal activity in general, and ransomware spectacularly. 

My impression is that many of the proponents fall into 2 or 3 camps. One camp is the promoters--they have something to sell. Maybe because they are also a believer (Camp 2), often because they are a huckster. Another camp is the deep believers. These seem to be libertarian types, who have some very deep-seated dislike of any form of centralization. They see currency independence a crucial step in some form of idealized, Atlas Shrugged-ish elimination of the need for individuals to have any need for government. Then the third camp are speculators. They see the meteoric rise of crypto and are drawn in by the justifications. The difference between the deep believer camp is that the financial payoff is what gets their attention; the belief follows.

So there is another strike against cryptocurrency--the company it keeps.

There are a number of crypto supporters who jump in to say that the tech is about much more than currencies. But I never hear even vaguely convincing examples(1). People talk about smart contracts, but they seem very vague, it isn't clear to me how they practically improve on "dumb" contracts (other than the satisfaction of removing a "middleman", even if that doesn't save money or have any tangible benefit), and it seems like they assume away the enforcement problem.

Then there are NFTs! The first time I read about them, I thought it was an elaborate tech in-joke. NFTs are screaming "The Emperor Has No Clothes"--setting aside extreme niche, hobbyist uses, that could probably also be accomplished with traditional commercial centralization (e.g., being able to prove were an early backer of some Indie artist). 

I've listened to podcasts on the topics, to see if I can find out what I am missing, and they usually just convince me more. I should admit, I am at some risk of "motivated reasoning", especially regarding NFTs, because their promoters talk about creating "digitial scarcity". As if scarcity can be a social good! I hate scarcity, I want abundance!!!! 

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(1) Granted, it in principle it could be that time will find great use cases, even if nobody is citing them now. E.g., Friendster or even FB didn't foresee the power of the news feed. I will still keep my bet.

Service to Facilitate Cash Offers for Houses

NPR had an interesting story on a trend where companies enable consumers to make cash offers for houses, rather than having a mortgage-approval contingency. This makes their offer more appealing to the seller, since it reduces risk. Even with a pre-approval, many things can go wrong. My mother was a real estate agent, and as a youth, hearing her stories of deals falling through due to a buyer's buyer's buyer failing to qualify for a mortgage, I often wondered that the whole system didn't wind up in gridlock. Cash offers do eliminate that problem.

I'm not sure what to think. When I evaluate a new business process innovation, I want it to make the overall system more efficient. Usually, that means taking cost out of the system. For instance, mortgage securitization adds an extra step in the process (packaging the loans), but those transaction costs are outweighed by the efficiency of capital allocation (no geographic disconnects between mortgage demand, and funds available to lend).

The question the interviewer should have asked, but didn't, is what is the net additional cost to the buyer, to get the backing of the company that "fronts" them the cash?

I can think of ways this might add efficiency. One source of efficiency is simply compressing the time-to-closing (another benefit of cash offers). The longer the time-to-closing, it could be more likely there are inefficiencies such as temporary housing, temporary storage, or the pending sale house standing empty. It's not completely obvious though--closing too fast could bring complications of its own. Of course, just because you make a cash offer doesn't mean you have to close fast--the cash buyer could offer the seller flexibility, fast or slow, whatever they want. So it seems like there is surely some efficiency there.

 The existing mortgage underwriting process is cumbersome and time-consuming. So maybe there is some efficiency through vertical integration and better sharing of information? Maybe the cash sponsor is adding value as a trusted advisor (that part in the NPR story about not letting the customer offer more than they think the house is worth).

Make Congressional Representatives Less Parochial

A few years ago, this idea came to me that the US, collectively, might get a better Congress if it were less parochial. My proposal was that some fraction of Congress should be elected by randomly assigned national constituencies.

I have a refinement, or alternative, to that idea. I would like to see some fraction of each member to be elected by a randomly assigned national constituency. Off the top of my head, 20% national constituency seems like a good number.

That would preserve local representation, while introducing a national constituency large enough to be a powerful tie-breaker.

Viruses do not necessarily evolve to be milder story

Zeynep: Viruses do not necessarily evolve to be milder...Evolution is not a teleological process, bad match for a story-telling species' brain. Things seem to make sense—the just-so story...

The whole thread is right-on, but as someone whose bete noir is the human weakness for a good story, I love the second sentence.